The world’s largest economy is strongly combatting the coronavirus outbreak. Rapid distribution of coronavirus vaccines from multiple developers, Fed’s continued support with easy monetary policies, fiscal stimulus support and reopening of non-essential business are strengthening hopes of rapid recovery from the coronavirus-led slump.
Going on, per the latest FOMC minutes, the central bank will wait patiently to attain the “substantial further progress” benchmark before tightening the policy, as stated in a CNBC article. Moreover, the summary from the meeting maintained the same stance on inflation as Federal Reserve chairman Jerome Powell had discussed.
According to a CNBC article, Powell has been bullish on the economic recovery achieved so far from the pandemic-led slump. He also maintained that high inflation levels were temporary and will return to 2% over the long term, per the same article.
Furthermore, the latest U.S. consumer confidence data looks impressive as the metric has surged to its highest level in about 16 months in June. The Conference Board's measure of consumer confidence index stands at 127.3, comparing favorably with an upwardly revised reading to 120.0 in May. Moreover, June’s reading surpassed the consensus estimate of 119.0, per a Reuters’ poll.
Also, per the Fed’s recently-released data, total industrial production rose 0.8% in May. Going on, there was a 0.9%, 1.2% and 0.2% rise, respectively, in manufacturing output, mining and utilities production. Total industrial production rose 16.3% year over year in May.
Wall Street also cheered President Joe Biden’s announcement of the White House striking an infrastructure deal with a bipartisan group of senators. According to the White House, the infrastructure deal will include $579 billion in new spending.
Strengthening optimism, coronavirus vaccines have also been found effective against the Delta variant. These include vaccines by Pfizer (NYSE:PFE) /BioNTech and AstraZeneca (NASDAQ:AZN). Two doses of their COVID-19 vaccine have been found to be about 88% effective against the Delta variant, per a CNN report. Moreover, Moderna’s (MRNA) COVID-19 vaccine has been successful in producing neutralizing titers against all variants tested, including the rapidly spreading delta variant (B.1.617.12).
Meanwhile, investors seem worried about the sustainability of the U.S. economic recovery from the pandemic-led slump and the delta variant threat. Further, after an impressive first half of the ongoing year, market analysts are anxious about the Wall Street’s performance for the rest of 2021, according to a CNBC article.
In fact, analysts are projecting smaller and rougher gains in the second half of 2021. A CNBC Market Strategist Survey that covers about 16 top strategists’ forecasts reflects that the Wall Street’s consensus year-end target for the S&P 500 is pegged at a near 2% loss from the index’s current level, per the same CNBC report.
Moreover, inflation levels continue to rise in the United States. According to the Commerce Department, another major inflation indicator, core personal consumption expenditures (PCE) price index, used by the Federal Reserve to implement policies, climbed 3.4% year over year in May, per a CNBC article. Notably, it registered the biggest gains since April 1992 and was on par with Wall Street estimates, per verified sources.
Also, according to the latest CNN tally, the Delta strain is now found in all 50 states and Washington, DC. Further, this highly contagious and aggressive variant accounted for 26.1% coronavirus cases in the United States as of Jun 29, per the Centers for Disease Control and Prevention data and a CNN report. Notably, the rapidly-spreading mutants induced a widespread fear, putting responsibility on the local and state officials to ramp up the vaccination rate.
Mid-Cap ETFs to Consider
As such, investors seeking to capitalize on the strong fundamentals but worried about uncertainty should consider mid-cap ETFs. Below, we have presented five popular mid-cap ETFs:
Vanguard Mid-Cap ETF VO
The fund seeks to track the performance of the CRSP US Mid Cap Index, which measures the investment return of mid-capitalization stocks. It has AUM of $50.31 billion. It charges a fee of 4 basis points (bps) (read: A Quick Guide to the 25 Cheapest ETFs).
SPDR S&P MIDCAP 400 ETF Trust MDY
The fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P MidCap 400 Index. It has AUM of $21.23 billion. It charges a fee of 23 bps (see: all the Mid Cap ETFs here).
iShares Russell Mid-Cap Value ETF IWS
The fund provides exposure to mid-sized U.S. companies that are thought to be undervalued by the market relative to comparable companies and tracks the Russell MidCap Value Index. It has AUM of $14.19 billion. It charges a fee of 24 bps.
Vanguard Mid-Cap Growth ETF VOT
The fund seeks to track the performance of the CRSP US Mid Cap Growth Index, which measures the investment return of mid-capitalization growth stocks. It has AUM of $11.33 billion. It charges a fee of 7 bps.
Schwab U.S. Mid-Cap ETF SCHM
The fund’s goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Mid-Cap Total Stock Market Index. It has AUM of $9.67 billion and charges a fee of 4 bps.
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SPDR S&P MidCap 400 ETF (MDY): ETF Research Reports
Schwab U.S. MidCap ETF (SCHM): ETF Research Reports
iShares Russell MidCap Value ETF (IWS): ETF Research Reports
Vanguard MidCap Growth ETF (VOT): ETF Research Reports
Vanguard MidCap ETF (VO): ETF Research Reports
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